Pound Sterling to Euro (GBP/EUR) Exchange Rate Forecast: German GDP In Line With 1.5% Predictions
The Pound Sterling to Euro (GBP/EUR) exchange rate began Thursday in a narrow range after German 2014 Gross Domestic product (GDP) figures remained in line with forecasts.
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Last year saw the German economy record 1.5% growth.
Meanwhile the UK RICS House Price Balance resided at 11% in December, beating 10% forecasts.
Earlier… The Pound Sterling to Euro (GBP/EUR) exchange rate advanced during Wednesday’s European session as the European Central Bank (ECB) prepares to undertake a period of quantitative easing (QE).
In addition, Eurozone Industrial Production contracted by -0.4% on the year in November after October’s 0.8% growth. However, November’s monthly ecostat saw an unforeseen increase of 0.2%, which saved the annual number from dropping to -0.7% as predicted.
November marks the third consecutive month of growth, a silver lining for the flat lining Eurozone.
However, most investors are focused on the prospect of QE at the end of this month. The ECB’s next meeting is scheduled for 22nd January and could see bond buying begin with immediate effect.
ECB President Mario Draghi stated: ‘All members of the Governing Council of the ECB are determined to fulfil our mandate.’
World Bank Cuts Global Growth Forecasts, Euro Exchange Rate Pressured lower
Furthermore, the World Bank has cut global growth forecasts as the poor Eurozone recovery continues. The US economic recovery has continued to strengthen but has, unfortunately, been able to combat weaker progression elsewhere.
World Bank Chief Economist Kaushik Basu stated: ‘The global economy today is much larger than what it used to be, so it’s a case of a larger train being pulled by a single engine, the American one. This does not make for a rosy outlook for the world.’
Falling oil prices are weighing on many currencies and economies at present and economists have forecast further declines in the near future. The World Bank expects to see average oil prices decline 32% this year.
Basu continued: ‘It is as challenging a moment as it gets for economic forecasting. While lower oil prices are good overall for the global economy, the process of falling creates uncertainty, winners and losers.’
But the Eurozone has other issues. This week saw European Central Bank member Ewald Nowotny state that if Greece exited the Eurozone (coined Grexit), it could have contagious consequences.
Nowtony stated: ‘For Greece it would be a catastrophe, for the other Euro countries a massive problem.’
January 25th will see the Greek snap election take place which could cause an uncomfortable standoff between the EU and the IMF. The conflict could see Greece leave the Eurozone.
Furthermore, Moody’s has suggested that a Greek departure could inspire a recession in the Eurozone.
Moody’s Chief Credit Officer Colin Ellis stated: ‘Although a Greek exit today would likely trigger renewed recession in the remaining Euro area, the credit impact may be less pronounced than in 2012 because contagion risk from a Greek Euro exit has materially declined and because policy makers now have much stronger tools to limit the damage from such an event.’
Meanwhile, the UK saw inflation slip this week from 1.0% to 0.5% as a result of lower oil prices. However, the core measure which excludes volatile items such as oil saw a rise from 1.2% to 1.3%.
Pound Sterling to Euro (GBP/EUR) Exchange Rate Forecast
The Pound Sterling to Euro (GBP/EUR) exchange rate could be in for an interesting day of trading on Thursday with the release of 2014 German Gross Domestic Product (GDP) figures. At present, the economy is forecast to have grown by 1.5%—however; any figures below the prediction could place additional pressure on the Euro.
Both German and Eurozone final figures are out on Friday and could be another development to affect the Single Currency.
The Pound Sterling to Euro (GBP/EUR) exchange rate is presently trending in the region of 1.2919 with a market movement of +0.29%. The Euro to Pound Sterling (EUR/GBP) exchange rate is residing at 0.7743.